DAP off-take surges, thanks to subsidies

DAP off-take surges, thanks to subsidies ISLAMABAD: The impact of government subsidies on fertiliser sales has started showing results, as the off-take of di-ammonium phosphate (DAP) surged by almost 300 per cent in August on a year-on-year basis.

Meanwhile, the DAP off-take in the first eight months of the current calendar year has shown an increase of 42pc on an annual basis.

The main reason for the higher off-take in August was a significant decline in prices. The price of a 50-kilogram DAP bag was between Rs2,500 and Rs2,600 during August as opposed to around Rs3,500 a year ago.

“While there has been a decline in DAP prices in the international market, the Rs300 subsidy per bag added to the buying surge,” said Muhammad Saad, research analyst at Optimus.

September is a comparatively lean period in terms of the fertiliser off-take. But higher sales are likely from mid-October with the start of the Rabi season.

Figures released by the National Fertiliser Development Company (NFDC) show the DAP sales from January to August was 821,605 tonnes compared to 580,422 tonnes from a year ago.

Similarly, the result of government subsidies leading to the sale of imported urea at Rs1,200 per bag also became visible in August.

Although the subsidies were announced in the 2016-17 budget, they materialised in August. The urea off-take in August was 34pc year-on-year. NFDC figures show urea sales in August at 573,701 tonnes compared to 428,920 tonnes.

Falling international prices are likely to benefit farmers in the Rabi season, although analysts also link water availability in the upcoming winter months with fertiliser sales during the wheat-growing season.